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Conoil Nigeria managing director, Sanjay Mathur, Executive Director Finance, Bamidele Ogunnaike, and Financial Controller, Abdulatif Ijaiye, have stepped down as the company recorded a disappointing half year performance.
According to a recent filing on the website of the Nigerian Stock Exchange (NSE), the company said Pandey Ajay, an Indian, has been appointed acting managing director while Akinyemi Akinlawon and Edim Aiko are to act as Executive Director Finance and Financial Controller respectively.
Analysts have raised concerns over the recent development while some say such an event is huge and unusual.
An industry expert said the directors may have been forced to resign because they couldn’t meet revenue and profit target. Indeed, the company’s performance in the second quarter was disappointing and fell short of analysts’ expectations.
For the first six months through June 2017, Conoil’s net income dipped by 58.82 percent to N427.29 million, the lowest in 2 years.
Conoil and other firms operating in the downstream oil and gas industry have been grappling with rising debt, receding cash and cash equivalent brought on by delay in the payment monies by government.
Cash and cash equivalents of six major oil marketers quoted on the exchange dipped by 53.09 percent to N43.30 billion in June 2017 from N92.32 billion the previous year touching levels not seen in 3 years, according tom data compiled by BusinessDay.
Perhaps more worrying is the fact that the cumulative net operating cash generated from operating activities of Total Nigeria Plc, 11 Plc, Conoil Plc, Forte Oil Plc, MRS Plc, and Eterna Plc, fell by 92.24 percent to N4.82 billion as at June 2017.
Federal Government owes major petroleum marketers arrears of subsidy claims of over $2 billion, and the prolonged delay has hindered these firms amid rising interest on loans borrowed from banks for the importation of the product.
With no allocation for subsidy payment in the 2017 budget, analysts say oil majors such as Oando, Forte, Mobil, Total may be forced to cut back on dividend payment while the possibility of a downsize may not be ruled out as these firms slim work force in a bid to cut cost.
“These firms used to make money when they import petroleum product directly and sell to other smaller marketers at a profit but such money reduced when Nigeria National Petroleum Corporation (NNPC) started doing the importation,” said Dolapo Oni, head of Energy Desk at Ecobank Plc.
“Unlike before, when you don’t sell, your money is stuck in form of delayed subsidy payment but now when you don’t sell, you don’t get money,” said Oni.
Rising costs per unit of products, spiralling interest expense have also contributed to a slump at the bottom line (Profit).
The cumulative net income of the six major marketers dipped by 27.78 percent to N13.36 billion from N18.51 billion as at June 2016, according data compiled by BusinessDay.
LOLADE AKINMURELE
